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Preparedness activitiesin the economy

500

0,04

-

4.5

Civildefense

22

0,002

-

4.6

Subsidies and subventions to theclosed administrative territories

10 149

0,85

0,13

Table 44

Expenditures related to previous militaryactivities

No

Title of expenditure

Amount, in Rbs. mln

% federal budget expenditure

% GDP

1

Pensions to servicemen

30650

2,56

0,4

2

Recycling and disposalof armaments

6036

0,51

0,08

3

Defenseconversion

250

0,02

4

Military reform

4 337

0,39

0,06

5

Funding to housing certificatesconstruction programs as part of the national capital expenditure outlays

4880

0,40

0,06

It makes sense to discuss some of theaggregated expenditures shown in Table 45.

The overall expenditures of the militaryorganizations comprise more than 22% of the federal budget expendituressuggesting that it may be expedient to get involved with them for thosebusinesses in Russia that look for lucrative contracts, which have also beengetting more stable since 2000. The aggregated military spending outside themilitary organization in Russia is considerably less tangible.

In table 45, item 5 of the nationaldefense, law enforcement and state security spending is significant in thesense that it is indicative of the expenditures level in 2001 (4.47% of theGDP) by comparison with the reference indicator of 5.1% GDP, approved by the RFPresident in 1998. Note that national defense was supposed to get theirregulatory 3.5% GDP, i.e. significantly more than 2.77% GDP shown in item 1of Table 2. Overall, comparing current expenditures with the standards one seesthat over the period of the defense reform, that is, by 2005, the level of thisspending will hardly be going down.

Table 45

No

Title ofexpenditure

Amount, in Rbs. mln

% federal budget expenditure

% GDP

1

Overall outlays for the Russian militaryorganization (armed forces, other troops, military units and institutions)

266085

22,29

3,43

2

Overall military expenditures outsidethe Russian military organization (Ministry of Nuclear Energy, some otherindustries, ROSTO, etc.)

17337

1,45

0,22

3

Overall military expenditure(military organization and outside)

283422

23,74

3,65

4

Aggregate direct and indirectexpenditures related to the current and previous military activities of theRussian Federation

329575

27,61

4,25

5

Overall outlays for national defense,law enforcement and state security

346309

29,02

4,47

6

Amounts of direct and indirect expendituresrelating to the current and past military activities, and all federalexpenditures in Russia on law enforcement and state security.

417905

35,02

5,39

Note that spending in items 5 and 6 ofTable 45 that exceeds 35% of the federal budget expenditures cannot beclassified as strictly military. Apart from defense spending, it incorporates asignificant amount (88330 million rubles) allocated towards the judiciary,prosecution, police, etc., that hardly any country would>

We are listing below some analytical dataon the distribution of funds allocated to the RF Ministry of Defense fordevelopment and maintenance of the armed forces in Russia. The aggregateexpenditure for these purposes is to be found in line 1.1 of Table 2, while inTable 46 they are itemized.

Table 46

No

Title ofexpenditure

Amount, in Rbs. mln

% federal budget expenditure

% GDP

1.1

Development and maintenance of armedforces in Russia

203061

17,0

100

1.1.1

Development of theRussian armed forces

70370

5,90

34,7

1.1.2

Maintenance of theRussian armed forces, including:

132691

11,10

65,3

1.1.2.1

Central military administration bodies

912

0,07

0,4

1.1.2.2

Sustenance of the armedforces personnel, including:

91064

7,63

44,8

1.1.2.2.1

Money allowance toservicemen and money allowance to civilian personnel

62543

5,24

30,8

1.1.2.2.2

Foodsupplies

17000

1,43

8,4

1.1.2.2.3

Clothing

3628

0,30

1,8

1.1.2.2.4

Travel sustenance forservicemen and their families leaving for vacations or treatment

2900

0,24

1,4

1.1.2.2.5

Funding of benefits andcompensation to servicemen

1409

0,12

0,7

1.1.2.2.6

Other personnel expenses

445

0,04

0,2

1.1.2.2.7

Funding for certainstatutory benefits

3138

0,26

1,5

1.1.2.3

Combat training and logistical support to arms (forces), including:

37510

3,14

18,5

1.1.2.3.1

Lodging and maintenancecosts

15953

1,34

7,9

1.1.2.3.2

Acquisition and storageof special fuel and petrol

12000

1,01

5,9

1.1.2.3.3

Transportation

5700

0,48

2,8

1.1.2.3.4

Operation, maintenanceand repair of property and facilities

1890

0,15

0,9

1.1.2.3.5

Other expenses relatingto combat training and logistical support of troops

1967

0,16

1,0

1.1.2.4

Ministerial expenses oneducation and health care

2155

0,18

1,1

1.1.2.5

Servicemeninsurance guarantees

1050

0,08

0,5

Table 47

Tracks changes in military spending overthe last three years.

Budget Sections

1999 (mln. rubles)

2000 (mln.rubles)

2001 (mln. rubles.)

Percent change to 1999 (without/ withinflationary effect)

Beginning of year

End of year

20000*

20002*

2001

National Defense

93702

140852

209445

214688

+50,3 / +25,1

+123,5 / +86,0

+129,1 / +70,2

Law enforcement and state security

51324

79802

111547

131621

+55,5 / +29,4

+117,3 / +80,8

+156,5 / +90,5

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